Edit: clicked on your profile. Thanks for writing reghdfe. I use it with some coauthors on a project on healthcare now.
And it would be perfectly rational for an economist (or someone else) to trade a single stock if they had non-public information and there was no downside. Right now the downsides (it’s unethical / a gray area but depending on one’s position not always illegal) are not fully baking in the costs to society (e.g. a trader with non-public knowledge can get ahead of the broader market, impacting the ability to have a “fair” market and increasing costs for other investors).
I strongly believe that policy makers need to be indexed with broad exposure across, at a minimum, industry sectors but more preferably the US economy (or a state’s economy if they are a state representative). There is too much room for misaligned incentives (buy our depressed stock, pass this bill, make a couple million) that should be removed.
About reghdfe, you are welcome! I wrote it because the server for my PhD thesis was a piece of crap, but it kinda found a life on its own!
We would get more value, and much cheaper, by simply using a formula for money expansion and the resulting interest rate.